Good Business Bad Business

Good Business Bad Business

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The concept of corporate social responsibility (CSR) has undergone significant changes over a period of time worldover. It is no more considered an ad on, ad-hoc or cosmetic activity of charity, philanthropy or relief. Today it is an integral part of business strategies, right from conceptualization of business model product disposal. CSR is necessary for sourcing of raw materials, value configuration, pricing, partnering with distribution channels and even buy backs. No wonder some industries would call it corporate sustainability (CS) rather than CSR.

The sustainability of the business without our communities is unthinkable today if we want to sustain our planet.

Businesses today operate in a complex world of permanent flux. There are multiple stakeholders with diverse expectations. Therefore, stakeholders’ engagement has become a real necessity. Aligning business strategies not just to satisfy stakeholders but to garner their unequivocal support is the crux of the corporate sustainability. It includes all stakeholders, their right practice and right policies about workforce, diversity, ethics and governance, biodiversity and environment, fair price, fair wages, supply chain integration and even integration of channel distributors.
The business operations must not create nuisance to the communities or environment around.
You must mitigate the social or environmental disharmony, according to the principle of ‘Polluters Pay’.Mind you, the organization is not doing a favour by abiding to the laws of the land. Rather if it fails to do so, it invites punishment by the state.
So CSR is aspirational and strategic. Organizations need to identify their business challenges proactively from a short-term and long-term perspective both societal and environmental.

Conscientious business people break it further into social, human, financial, economic and natural. You can mitigate the risk by partnering with communities in creating value. Look for opportunities to serve communities through innovations. Innovations aimed at creating value for the lower half of the pyramid have often proved to be orbit changers. They make good business sense, at the same time create tremendous value for the communities. Tata Nano, Arvind Healthcare and many such examples exist.

Mirakle Courier is a small organization but with great societal value. Most of its employees including the delivery boys cannot speak and hear. What a wonderful organization it is! Organizations with great societal value generate trust; and a brand is all about trust. Investing in CSR is a long term investment in the brand.
<blockquote>For doing right business you need not have deep pockets, what you must have is good intentions</blockquote>
It is good that organizations worldwide have become conscious of their responsibilities towards communities and environment around them. They proactively look into their business models and search for sustainable alternatives.

Let us take examples of Levi’s jeans. The environmental cost of manufacturing a pair of Levi’s 501 jeans is resource intensive. According to LS &amp; CO’s Life Cycle Assessment on Levi’s 501 Jeans for US market of 2006 production year, the production of one pair of jeans from a cotton field to a consumer emits 33.2 kg of carbon dioxide, spends 3,480.5 liters of water and 400.1 mega joules of energy. That’s the equivalent of driving a car 78 miles, taking 53 showers and watching a plasma TV screen for 318 hours.

The decision of the world’s one of the iconic jean makers going green is about more than doing what is right. Its vision for sustainability in March 2008 said, “We will build sustainability into everything we do so our profitable growth helps restore the environment.”

A significant aspect is, if an organization acts proactively for corporate social sustainability, it garners maximum public trust and its brand value increases.

Since the term triple bottom lines was coined in the year 1994 by John Elkington, more and more Companies in India and abroad have gone for the triple bottom line reporting. While there are many which come out with separate annual sustainability reports. Others prefer to mention about the same in their annual reports.

There are also a plethora of brand embracing these standards. This is a welcome trend.

The Global Reporting Initiative, the UN Global Compact, Social Accountability 8000, ISO 14001, Dow Jones Sustainability Index and the Tata Index for Sustainable Human Development are just to name a few frameworks which are excellent instruments of disclosure, measurement and management.

There are many other wonderful frameworks available too. As I said earlier organizations need to integrate CSR/sustainability intrinsically into their value system and business models. Any number of frameworks, guidelines and processes would be futile unless there is inner conviction for them from the leaders managing the business. Governments across continents are coming up with stringent guidelines and legislations, but it is again the Niti (codes, instruments, norms), Niyat (intention, conviction) and Nyaya (justice) relationship, as said Professor Amartya Sen in his book ‘The Idea of Justice’. If the intention of those who are required to implement Niti is not appropriate, Nyaya or justice cannot be met. Failing to deliver justice in triple bottom line context is creating dis-equilibrium in the business-echo system and self-injurious in nature. Organizations should be able to invest in developing transpersonal leadership capable of leading business sustainably.

By Ajit K P Pattnaik
The writer is the General Manager,
Strategy and Business Excellence,

TATA Housing Development Company Limited
The views expressed here in the article are his.
He is reachable at:

About the author

CSR VISION is India's (probably World's) first monthly magazine in print devoted to CSR and Sustainable Development for bringing together all stakeholders of SUSTAINABLE DEVELOPMENT at a global and local levels and act as a platform for promoting strategic CSR and sustainable development practices through dissemination of information and knowledge.